AUDUSD—weak but feisty

After poking its pointy little head back above .9000 yesterday (the high was .9071 and no doubt it was trying to reach back inside its upward channel that showed on the three-hour chart I posted on Friday), AUDUSD proceeded to tumble down, moving to a low of .8879. I closed a short yesterday (not blogged about so I won't count it in profits) but the pair looks weak today as well so I've shorted again at .8919 and .8917. It reached up to .8937 overnight so that lets me get in with a tight stop.

There's good support in the .8879 area but if it can drop through there then it should move at least to .8800 and perhaps further. However, as I wrote last Friday, you have to be careful with this pair. Yesterday's high was higher than last week's high of .9036. The bulls will fight hard to keep this pair afloat and there is bullish divergence on the hourly chart along with some healthy looking candles. So, as is usual in trading, there is risk. The risk is the amount of your stop so that's why tight stops are good.

Support is at .8879, .8814/47, .8785, and .8518. Resistance is obviously the .8937 and then .9000, .9036, .9071, and .9100. But it it reached .9100 today, I'll eat a jar of Vegemite. (Only kidding, guys—while the Australians eat it with everything, it's too much for my delicate NorAm sensibilities). Here's the one-hour chart:



















© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.